WHAT ARE THE DIFFERENT TYPE OF LOANS IN USA ?
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| Education Loan USA |
There are many types of
student loans to choose from, and it's important to find one that is right for
your particular situation. The two main types of loans are federal loans and
private loans.
There are three main
types of federal loans:
Federal Stafford Loans -
These are awarded based
on financial need and are regulated by the federal government. They can be obtained
from a bank, credit union, or directly from the government. There are three
kinds of Federal Stafford Loans
Subsidized Federal Stafford Loan -
This loan is long-term
and need-based, with a low- interest rate. The term "subsidized"
means that the government will pay the interest on the loan while a student is
in school or when the student requests a grace period or deferment.
Unsubsidized Stafford Loan -
This loan is long-term,
non-need-based, with a low-interest rate. This type of loan is best for
students who don't qualify for other types of financial aid, or who still need
more money in addition to other forms of financial aid. Almost all household
incomes qualify, and "unsubsidized" means that the interest on the
loan is the responsibility of the borrower. In some cases, however, payments
can be postponed.
Additional Unsubsidized Stafford Loan -
These loans are reserved
for borrowers that are classified as independent students, as determined by
Federal guidelines.
Federal Plus Loans -
These loans are available to parents whose children are attending college as
full or half-time undergraduate students. They are awarded based on credit
history and cost of attendance. The interest is low on this type of loan, but
repayment usually begins within 60-90 days after full disbursement of the loan,
or after the student graduates
Federal Perkins Loans -
Perkins loans are
awarded to students based on extreme financial need, and usually have very low
interest rates. The total funds available to be disbursed for these loans is
limited, however, which means that the amount of the loan will likely be
relatively low. The interest doesn't start to accrue until 9 months after a
student drops below half-time enrollment or graduates. If you're not sure if
you qualify for a Perkins Loan, ask a college financial aid advisor. One
important thing to note about these loans: they are reported to a credit bureau,
which means that if you are late on payments, or default on your loan, it could
damage your credit. If you don't qualify for federal loans, then you might consider
looking at private lenders. Banks and loan companies often provide student
loans at relatively low interest rates. Each institution is different, so be
sure to check out the terms and conditions of any loan you obtain, federal or
private, and make sure you know the details before signing on the dotted line.
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